Archive for the ‘Cotton Futures Trading’ Category
American farmers are reconsidering other crops to sow for good reason. The recent cotton futures rally – the biggest in four years – and drought conditions that won’t seem to go away in the Southern Great Plains are making cotton look more lucrative.
A cotton exporter in South Carolina claims cotton planting can total 11M acres, which is 10% more than what the USDA claimed this time last month. Since a 2.5 year cotton futures low last June, cotton prices have soared 31% and have experienced a five consecutive monthly gain – the longest since the summer of 2009.
Kevin Riordan, director of research at Capital Trading Group in Chicago, had this to say regarding the current cotton futures situation, “In light of the fact that December Cotton (futures) prices are not looking firm, many farmers identify the recent rally in cotton (futures) prices as the main reason they are switching back to cotton.” Riordan adds, “…the expected drop in (cotton) acreage announced earlier this year could be exaggerated.”
Cotton futures have backed off recent highs and are in the process of a significant pull-back. I am looking for a lower-risk way into the long side of cotton futures at this time.
Just as we have learned of global cotton demand gaining in recent posts, cotton futures have climbed to their highest price since last May. US cotton farmers – the world’s top exporters of cotton – are standing-by for a decrease in output.
Last year the USDA reported farmers sowing 12.3M acres of cotton, but with more profitable crops enticing farmers to switch, it appears only 9.4M acres of cotton will go into the ground for 2013. On Friday, the USDA is expected to increase the prediction for global cotton demand as some countries anticipate increased cotton use.
“We have tightening ending stocks and increasing global demand for cotton,” said Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current cotton futures situation. Moreno added, “The stock market is signaling better economic conditions which will in return push cotton (futures) higher.”
Cotton futures making new highs signals on top yet in sight. We exited cotton futures a little early last week, but am looking for a lower-risk position to enter back in to.
Farmers around the globe are said to be reducing cotton plantings, at a time when China is seeing increased demand for higher quality imports. Cotton harvests are heading for the biggest drop in two decades because of the reduced cotton plantings.
Data from the Int’l Cotton Advisory Committee shows cotton crops tumbling the most since 1993 – 11% – in the fiscal year beginning August 1st. By July next year, global cotton stockpiles are expected to shrink by almost 5% which will be the first reduction in four years.
Kevin Riordan, director of commodities research at Capital Trading Group in Chicago, has this to say regarding the current cotton futures situation, “Demand alone will drive up cotton (futures) prices higher later this year as China attempts to import cotton that is simply not available to be deliver.”
Cotton futures are clearly in an “up-trend” at this time. We bought cotton futures today on a pull-back, was also stopped out as the market continued lower. Let’s be patient for a clearer picture of the dip in this market.
The world’s biggest user and importer of cotton – China – is playing a key role in the direction of cotton futures. Trading up to highs not seen since October, cotton futures spiked higher on the outlook demand for cotton there is progressing.
Government officials in China stated only yesterday they have been selling off state cotton reserves this week in order to meet demand at their domestic mills. Cotton imports in China are said to have risen by 75% last month, compared to amounts the prior month, and even our USDA recently boosted their estimates for Chinese cotton imports by almost 9%.
Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, stated today regarding the current cotton futures situation, “China has been releasing cotton from it’s reserves, but the quality of this cotton is rumored to be poor. This is creating the potential need for China to be a heavy importer of U.S. cotton.”
Cotton futures trend is clearly up, and we are long this market. No sign of a top for cotton futures in sight.
The USDA reported this morning the US domestic cotton crop will be 1% larger than what was forecasted last month as harvest yields increase. Cotton futures are sharply lower as a result of this revelation.
Last years cotton crop brought in just over 15.5M (480 lbs.) bales. This years crop, which harvest began just last month, is expected to bring in just over 17.25M bales – a nominal increase that cotton futures is rejecting the current demand.
Kevin Riordan, director of research at Capital Trading Group in Chicago, stated today in technical terms the current cotton futures situation, “(Cotton futures) prices remain in a two week trading approximately between 7250-7050.” Riordan added, “Failures to hold the lower end should lead to a test of the next (cotton futures) support area of 6950 and then 6735.”
We are currently short cotton futures as of last night. The trend is down and I expect further cotton futures weakness into this time next week.
With the current outlook of a global economic slow-down, cotton futures retreated today in it’s new found uptrend. The issue is “demand” amongst fragile economies around the world.
Japanese government officials acknowledged today their country’s primary risk as “further slowing down of overseas economies…and ‘sharp fluctuations’ in the financial and capital markets.” Even China, the world’s number one cotton consumer, is considering selling cotton inventory and canceling some cotton imports.
“Cotton (futures) continues to slowly ease back with lighter demand anticipated as a result of global economic slowing. Additional pressure is coming from news that China is expected to release up to 400,000 metric tons from their (cotton) reserves onto the domestic market,” said Barb Levy, chief director for Futures & Options Xecution’s Futures Division in Chicago, regarding the current cotton futures situation.
The trend for cotton futures is up on the daily charts according to my work. I am looking to reset a long position in cotton futures in the short-term.
American retail clothing stores may see more down side in prices as record cotton harvest are being realized around the world. Cotton supply is said to be exceeding demand not seen since the 1990′s.
The USDA estimates cotton supplies to be 15M bales in excess and adding to the global stockpile by 32% – the second largest amount on record. Analysts estimate cotton futures to drop to a price of .75c per pound by the end of this year.
“Record harvests with cotton are going to put some more pressure on the market. It is possible that the cotton market can become very bearish if we take out the last near term lows around the 84.25 area. Now would be a good time to get some exposure to the short side either through (cotton) futures or options,” stated Chris Hildebrand, vice-president of trading at HighGround Trading Group in Chicago, regarding the current cotton futures situation.
The trend for cotton futures continues downward, albeit a snail’s pace. Looking at a cotton futures weekly chart, I can’t help think this market is in for a turn-around – maybe caused by another event. I’m trading this cotton futures market with caution.
Today the world’s second largest cotton exporter suddenly halted cotton shipments without prewarning. India’s Commerce Ministry abruptly halted cotton exports until further notice, while the country’s cotton association has called for a formal review.
The USDA estimated India to provide almost 17% of world cotton sales before the ban. No reason was given in India’s official statement, either.
“Today, without warning, the Indian government put a ban on cotton exports, shooting the market limit up. There has been no explanation for the move by the Indian government, so far and we would expect another (cotton futures) limit up day again tomorrow unless we get more of an explanation from them. Tread very carefully in this (cotton futures) market as it is inherently thin as it is and limit moves can happen very fast as we have seen in the past couple of years,” said Chris Hildebrand, vice-president of trading for HighGround Trading Group in Chicago, regarding the current cotton futures situation.
Cotton futures had been in a mild down-trend before this news, and now after limit-up, the market has bounced back up to resistance. I will have to await the dust to settle in this market to allow a lower-risk entry…
So far, the the worst performing physical commodity this year is cotton futures. The near to mid-term future for this market doesn’t look promising either due to two factors: a record cotton crop and declining demand (due to recent “high” prices). Global stockpiles are expected to expand the most since 2005.
The USDA estimates cotton harvests to increase 7.5% (in the year ending in July 2012), as cotton demand simultaneously drops to a three year low. Cotton prices (wholesale) and cotton futures can also be expected to drop accordingly…another 15% is expected from this point.
Kevin Craney, a senior commodities broker with RJO Futures, stated today regarding the current cotton futures situation, “Cotton (futures) remains under pressure due to the global supply glut and global economic growth slowing. Without any significant turnaround in the global macro-economic conditions, low demand will continue to keep (cotton) prices from moving much higher.”
In my work, cotton futures remains in a down-trend, but I am expecting a pull-back higher from here. Plus, I think there is more “upside” potential for cotton futures from this point, than downside expectations…
Cotton futures have come alive after tropical storm “Lee” passed through the cotton growing region in the deep south. It is unclear yet if cotton crops are damaged and to what extent.
The storm unloaded much precipitation not only to Louisiana, but to the entire Gulf Coast and is reportedly expected to continue east to Georgia and North Carolina. This storm passing comes at a time when worldwide cotton imports are expected to rebound.
James Lombardo, a senior commodity trading advisor at R.J. O’Brien Futures in Chicago had this to say regarding cotton futures today, “Damaged crops from tropical storms have helped the recent surge in price. Many traders are expecting the USDA to lower its production forecasts. This week’s crop progress report posted a new with cotton 28% good/excellent compared to last year this time at 60%. Cotton in Texas this week was rated 12% good/excellent, this time last year was 65%. That’s a significant percentage reading.” Lombardo adds, “Supplies remain tight supporting these (cotton futures) prices. Prices are attractive compare to where we’ve seen them in the past year.”
The trend for cotton futures is technically up, but the margin requirement is still much too high ($8,400 per contract) to trade at this time. I will await cotton futures margin to be lowered by one-half before getting involved, or I may include this market in a higher dollar sized-portfolio than normal.